> Seems like they handled the paternalistic benefits well also by just providing direct compensation instead.
This one's odd to me, because I thought the point of non-cash benefits was that it was much cheaper than giving out cash because the employer has more bargaining power than you.
An employer might, for example, negotiate a gym membership or online classes for their employees at 70% of the normal price. If you take advantage of those benefits, you're basically getting a 30% discount on something you'd otherwise pay full price for.
To continue the example, however, if less than 70% of your workforce uses that benefit, the company is now typically paying more in total than the individuals would be paying to just buy that thing on their own. (Obviously, this depends on how your perks are negotiated, but even then you also have overheads in paying someone to acquire/negotiate/maintain these kinds of nontangible benefits.)
Not to mention it falls into the Gift Card problem of dictating what those employees get to spend their money on, instead of giving them the freedom to spend it as they wish, which devalues the per-dollar benefit every time there's a perk that goes unused. (Food for thought: second-hand $100 gift cards often sell for $50-75 cash online.)
I don't have any inside numbers on what % of people take full advantage of all of their company benefits, but I'd venture a guess that there's not as much cost-savings as it seems at first glance.
Well it depends -- it's fairly simple math equation. The more paternalistic benefits you have, the more they cost, and the more people take advantage of more than one of them the more you risk hitting the value requivalent to the 3-5% promotion you have given that employee over 2 years.
Just my opinion, but if you were happy to take a 90k job because you live somewhere with a low cost of living for relatively less strenuous engineering work (let's be honest, Basecamp isn't pushing the boundaries of what can be done on the technical side, more on the product side), you're probably fine with waving off the extra 10k or whatever by thinking to yourself they'll pay for schooling if you ever do that (you probably won't).
Also, important to note that their 10% thing is performance linked ("profit sharing") -- so it pays for itself. If sales at the company grow 10% so they increase your pay 10% (and that isn't even necessarily what it is, they didn't clarify what the 10% is), the incentives are aligned and the company makes an outsize gain compared to each individual employee. It's a win-win-win, but most of the wins are on the side of the company, as usual. Compounding effects are much stronger than 10% yearly gain -- and what's even crazier is that you have to keep moving the company forward to keep getting the 10% -- essentially if you keep doing that, it's exponential improvement for the company, and each new person that comes in has to get on the hamster wheel. It's brilliant (which is why it's so common).
Just a theoretical example to make the numbers easier (rounding off to 100k).
That said, I also can't find anything anywhere on what people at basecamp are actually paid (nothing on levels.fyi or glassdoor, I didn't search very hard). I don't know what "SV salaries" means but not everyone in SV is making the average or median salary -- some people will be under or right at 100k, probably very early in their careers or when a company is taking a flyer on someone with no credentials.
In-kind benefits aren't taxed as income, so benefit both employer and employee in that sense, but they're also more likely than cash to never be used and thus become a waste for both parties.
Note in this case they're giving the cash value of the benefits for one year only, so presumably this will save them money in the long run unless they end up having to permaboost salaries, but that is doubtful. Market rate's the market rate and I don't think many people seriously make a decision based on whether one employer offers discounted gym memberships or not.
Totally. Not sure about the US, but at least in Spain that kind of benefits (private health insurance, restaurant tickets, etc) tend to be a lot cheaper for the employer often just for being a company, but usually for the large quantities they work with.
Calling benefits "paternalistic" is both loaded language and inaccurate:
> paternalistic : relating to or characterized by the restriction of the freedom and responsibilities of subordinates or dependents in their supposed interest
>2. No more paternalistic benefits. For years we've offered a fitness benefit, a wellness allowance, a farmer's market share, and continuing education allowances. They felt good at the time, but we've had a change of heart. It's none of our business what you do outside of work, and it's not Basecamp's place to encourage certain behaviors — regardless of good intention. By providing funds for certain things, we're getting too deep into nudging people's personal, individual choices.
The authors were not referring to benefits in general, but to a specific subset of them that seem to fit your definition well.
Dropping group-rate benefits is a sort of a pay cut, but only if employees were using the benefit enough. You'd have to do the math to see how it shakes out.
Not at all. They probably just got tired of people complaining that providing benefit X that could only be used by some slice of the workforce was therefore unjust. Which is absolutely ridiculous. But here we are.
This one's odd to me, because I thought the point of non-cash benefits was that it was much cheaper than giving out cash because the employer has more bargaining power than you.